LTCM General Counsel On Debt Denial: "There Is Little Time To Avoid Catastrophe And Almost No Exit", Suggests Gold Price Of $5,500

Recently we posted a terrific interview of Kathryn Welling with LTCM's former General Counsel, James Rickards. The lawyer turned economist, who is now a director of Omnis, posts the following stunner on the implications of the endless sovereign debt glut and the Keynsen abortion that every developed economy has undertaken. As the man who survived (and, well, created) the original market "systemic" event, Rickards should certainly be heard by all those who believe the government can sustain the latest, and by all measures, last iteration of the global reflation Ponzi. Not surprisingly, Rickards is the latest to jump on the fiat alternative bandwagon, seeing gold at $5,500 as a fair price for the precious metal.

The sovereign debt crisis has crossed a threshold. It’s no longer about economics. It’s about math and a complex system whose dynamics tell us there is little time to avoid catastrophe and almost no exit. Going forward, elections and policies will matter less as the debt plague takes hold and dictates hard outcomes.

It is the case that real debt cannot be repaid through any feasible combination of growth and taxes. We will soon arrive at the point where it cannot be rolled over. Debt includes contingent liabilities as well as bonds. In the U.S., this means social security, healthcare and housing obligations estimated at over $60 trillion. That does not include unfunded pension obligations of the states whose plans use fanciful 8% growth assumptions to limit contributions. Pension debt grows exponentially; a toxic brew of increased benefits, contribution shortfalls and anemic performance.

Even what we call money is debt. Paper money is a contract between citizen and government. As with any contract, it pays to read the fine print. Embossed on each U.S. bill is the phrase “Federal Reserve Note.” Give the Fed credit for full disclosure; these notes are liabilities. If the Fed’s mortgage assets were marked-to-market the Fed itself would be insolvent. In short, it’s all debt. Wealth is illusory if it involves a claim payable in dollars which are but a claim on an insolvent central bank backed only by its ability to print more debt. The situation is worse in the UK, Europe and Japan. The global financial system is a rope of sand.

If this system is illusory, how has it prospered over centuries? The answer is that for many years governments ran surpluses and at times had no debt at all. Growth was robust providing support to the tax base. Governments had the trust of bond markets to rollover maturing obligations. With some fits and starts, tangible wealth creation outpaced debt creation. And until recently paper money was backed by gold at fixed rates of exchange. Today all four legs of the table – surpluses, growth, trust and gold are gone or damaged.

There is no prospect for surpluses; nations hit the brink of disorder at the mere mention of 3% deficit-to-GDP ratios. Growth prospects are likewise dim given current policy. Obama grew spending on a feed-the-beast theory that forces taxes to rise to match spending. If Obama does not get his way, deficits will be ruinous. If he does get his way, taxes will stifle growth. You cannot tax your way to solvency in a world of low growth and compound interest.

As for market trust, go ask the Greeks. Each bond buyer has a critical threshold where he will not buy another bond. Picture bond buyers as theatre patrons. The image of someone yelling “fire” and patrons rushing out in a panic is familiar. More intriguing is the case in which just a few patrons rush out for no apparent reason. Do those remaining follow suit or stay seated? It depends on their individual thresholds. If high enough, everyone remains seated. But if some thresholds are low, those patrons leave too triggering other thresholds and so on until a cascade of exits empties the theatre.

In markets, the array of individual thresholds is immensely complex. The scale, interdependence and adaptability of market participants today are greater than ever. It would take very little to trigger a wholesale revulsion with sovereign debt.

What about gold? The view is that systems on a gold standard system cannot increase money supply as needed; of course, that’s the whole idea. Increasing money beyond the modest levels at which gold supply grows is the Keynesian remedy. But empirical evidence shows the so-called Keynesian multiplier is fractional and therefore a wealth destroyer. Another attack on gold is that there’s not enough of it to support money supply; but of course there’s always enough gold; it’s just a question of price.

The U.S. has never truly gone off the gold standard. The U.S. gold hoard today has a dollar value equal to about 20% of U.S. M1 money supply – a respectable ratio even in the heyday of the fractional gold standard. A gold price of $5,500 per ounce would comfortably support a broader U.S. money supply on a one-to-one ratio and maintain confidence in the dollar and U.S. sovereign debt.

Is there an exit? One path involves hyperinflation to destroy the real value of debt followed by redenomination and a new paper money game. The other path involves a gold backed currency at a non-deflationary price. This is a choice between denial and frank talk. Sound money leads to sound growth and the creation of real, not illusory, wealth.

He presumes we have as much gold as the gov claims, a big if. I would like him to focus more on the over 45% of resources being destroyed/wasted by the organized crime syndicate calling itself “government”. Find a way to provide what ever services you think that “government” is providing to you now through private contractual means and I think you will find at least 35% more resources to productively apply to things that people actually want and need.

I am not sure people want and need many of the things being produced now. Advertiser/propagandists tell us we want and need so much, but we put the shit all in landfills anyway, growing islands of plastic that float 1,000 miles off the coast of the state of CA. No, we don't need this stuff. We need to retool our ideas about need, about what is enough, and what is healthy. I actually think if we were smarter, we would have our needs met, have less stuff, BUT WORK SHORTER HOURS AND BE MORE FULFILLED.

I do not disagree, however, in the long process of becoming educated as to what is really “needed” and not “needed”, and each must learn for themselves, I definitely do not want the huge % going to the criminals so they can steal more, kill more, rape more, destroy more. I certainly invite those who can inspire others as to what is really needed and not needed. I would urge everyone to provide NOW for the tomorrows when they will need to eat, be clothed, take shelter, and defend themselves from the criminals when the bitter consequences of the last 95 years mistakes come home to roost. And boy I am really going to miss the INTERNET when/if the crime bosses succeed in taking it down. Thats why I recommend people have means of communication as well like ham radios. If I recall your personal preferences you might amend the list to include certain cherished libations (?!)

Want is a good word. "Need" - not so good. This was a thoughtful comment, up to the "we would have our needs met" part - then I start wondering whether it is YOU who is going to tell ME what my "needs" are....

That is a reasonable reaction to my comment. I think without the propaganda/advertising screaming at everyone, each person could decide on their own what they need. I think it would organically be much less than all the crap we shop for. I know it is true for me. I'm saving money and finding out I am more comfortable in my skin than I ever was as a 20 something young person.

but there was this really cool hand-held egg-splitter thingy advertised on fox last night (betw the buy-gold ad and the speed-up-my-pc ad...). but wait!, you'd get the 'in-the-egg' scrambler if you ordered 'now', and it was only two payments of $10 (plus shipping and handling).

Not only "stuff" here...but food too! We dont need all the artificial shit in our food...

why in THE HELL do you think we have obese people everywhere...

I saw one getting dinner tonight. He was my height, 5'10" and the GM of a great food place. Yet he had to be twice my weight(im 194lbs). Pushing max density...why? because we are made to think we need more.

Just step back and read a label...it's crazy. Cupcakes from the bakery at your supermarket....20+ ingredients....for cupcakes???

A few years ago I jumped off the micro$oft eternal upgrade path and have been using Linux and "obsolete" hardware. I'm off the tech bandwagon! Got rid of my cellphone, walk most places I need to, drive only when necessary. With all the free time, started working out with weight training and in the best shape of my life. Indeed! Less is more unless your talking about weight training!

Wow!!! What a simple, but profound statement. Thinking your idea through keeps taking me to the lifestyles of indigenous peoples where once basic needs are met, the remainder of time is spent in leisure/social activities that strengthen family and social bonds. I work 70 hour weeks this time of year and have worked several weeks in a row without an off day. I (we?) can't keep doing this . . .

Mr. Mandelbrot (I take it you are a complex person), I truly feel for you. After recently being put out to pasture after decades of 60 - 70 hr weeks, millions of miles flying in agony on United Airlines back and forth to Asia, resisting almost daily temptation to deck the next airline security brownshirt that felt up my crotch - all for the sake of...what? A family that has its own life without me, a house full of stuff that I hardly notice, sleepless nights wondering what I got myself into....

After the obigatory several month mourning period and countless plots to get the clueless jerks that cut me loose at the tender age of 60, I now feel free for the first time in my adult life. I am turning my attention to the community through Rotary, I have taken a part time teaching position, my wife and I have gotten into gardening big time, we bought a boat, I got elected president of our HOA for Pete's sake!! and I am loving it.

I may have an opprtunity to take a full time job soon (paychecks have their advantages) but I am thinking hard about this. After finally getting off Zoloft, I am loathe to start back down that road again. Less is definitely more...

There may be some of us looking at collapse as an opportunity/permission to transition to something more sane. I want out of the matrix too. I hurt myself and others by perpetuating and participating in it. I'm glad you got out. I hope Mr. Mandelbrot can get out too. I feel the pain and my situation is not nearly as bad as what he describes.

I always enjoy your posts. "There may be some of us looking at collapse as an opportunity/permission to transition to something more sane."

I am one of those who feels collapse affords us the only possible opportunity to break out of the "covet means" hypnotic trance that grips almost everybody (but, thankfully, fewer each day). And it's obviously not a guaranteed opportunity.

From my personal experience, not until I had the gift of time afforded me by my layoff did I get off my ass and start running down leads (mostly via links from fellow ZHers; thank you all) regarding what I previously may have sensed was "not right" with our system. Previously, I was always "too busy" with life to acknowledge such "crazy talk/speculation."

With the shoe now firmly on the other foot (for which I am grateful despite remaining jobless), I have tried many different approaches to just getting people to "take a peak under the hood." This has met with extremely limited success.

So, to conclude my "making a short story long," my personal experience required a severe jolt to seek anything different. Since I don't consider myself unique in this regard and have seen this opinion mostly validated over the past year, a collapse (or mass severe jolt) may be the ONLY possible opportunity for a positive "something different."

"There may be some of us looking at collapse as an opportunity/permission to transition to something more sane." Reading that gave me the sense of another piece of the puzzle snapping into place. Like looking at one of those pictures with the hidden pattern that you have to stare at for a few minutes before it hits you.

Reminds me of a quote from the movie Joe Versus the Volcano:

My father says that almost the whole world is asleep. Everybody you know. Everybody you see. Everybody you talk to. He says that only a few people are awake and they live in a state of constant total amazement.

Over time, I think that the amazement can become tinged by frustration and even despair as one watches the wonderful aspects of this life slowly ground down and destroyed by cultural insanity. If there is to be a silver lining to the seemingly inevitable collapse, it may be that, as you say, it will be an opportunity to transition to something more sane. The air is clearest following the storm.

Maybe this is why some, who may generally find themselves simply blown away by the realization that gooey accumulations of atoms such as ourselves can even be conscious at all, can become so focused on looking for signs of the apocalypse. And even wishing for it's arrival, despite the pain and destruction it invariably brings.

Thanks for being the only airline pilot I know courageous and self-aware enough to make those statements (former military, corporate pilot now). I specifically avoided the airline route for precisely the reasons you mention, and with your kind permission, I'm going to print your post and show it to my wife during her occasional complaints about the lack of ID90 privileges, A-scale, blah, blah, blah.

I'm in the midst of my ninth month of unemployment and, while I've still got two more decades to hit year 60, I'm certainly using this time to reevaluate my personal and professional goals.

MsC, we're right there with you. Over the last three years, we've pared our lives down to thepoint where almost everything we own will fit into about eight suitcases. It's liberating, quite frankly.

The result of being a materialistic society. I would like to see the world recycle more, there is so much more that we could do along those lines. Some of it isn't cost effective, but the technology would be developed if there was a market for it. We waste so much.

You make a good point because it does seem we are pretty limited on how we evaluate lifestyle and our pursuit of happiness. With some thought and re-adjusting, it is possible to live a pretty good material lifestyle while using much much less resources, we don't have to look to far to find examples, some European and Asian cities use a third of the energy we do without any major sacrifices to lifestyle, just cities, buildings designed differently.

Americans rail against taxes and the disposal income it takes from us but often do not focus on how we over pay for housing and health care (our private employers programs cover people for about twice the cost other countries get their health care). Many western Europeans chose higher taxes but get more security, they do not need to save for retirement, kids college, or worry about moving, losing jobs will not bankrupted by a one year job gap or a major illness.

I have a precious few friends that find a way to make a good basic living on part-time work and live frugally.

This is not to say that Europe vs US are our only choices and not to say our government or European governments are not colossal parasites in many ways, they are. If they were not corrupted crony systems but truly worked for our good, both our private goods and services and government services would be much less costly and regular folks would have more, more options, more needs met. Regulators would not be captured and would find sweet spot of stopping monopolies, fraud schemes, unsafe practices while not weighing down business with too much unneeded friction. Regulators would not advantage one business over another, allowing super profits for a few and no opportunity for the rest but would rather encourage lively, competitive, transparent, low-fraud markets.

I feel there are more than enough resources on this planet that the vast majority of us could have liberty, material basics (good food, shelter, health care) and time to enjoy ourselves, and the only ones left wanting would be those who could work, but chose not to. However, instead we waste resources, a few insider elites in govts and businesses parasite most of our wealth off us, and they squash technology that can help us in with material, monetary and health needs. We lack vision and limit our discussion to: big govt versus small govt.

And yes, the race of all countries to the bottom of the international currency ladder will not end well. Maybe we will get some vision after all the debt implodes, who knows. But we have more options than we think, way more.

even my brother hates me cause i am so fit and healthy and he isn't. he blames me for living the life of riley and he couldn't. i am motivated, cause i know i don't like going to see doctors. i don't like food much either, so that helps. i ride my bike everywhere. i have gotten strong enough over the years to carry a heavy back pack full of food and my golf clubs on my back, riding my bike. i haven't bought a tank of gas for my audi in over 3 months. i don't own anything, except for my way of having fun to stay fit stuff, bikes, skiis for winter, rollor skis, golf clubs for zen, swim suit, oh and a yoga mat. covers my needs, no fossil fuels here. this town i live in zero waste community, single stream recycle, complete composting, 100% recycle, nothing in a plastic petroleum based bag. feels pretty good, too bad i am so darn old.

when i got divorced at 35, i lost half of my stuff. when my kids (single dad) moved out to college, i got rid of 1/3 of my stuff, sold my house and rented. each time i felt freer. i saved and lived frugally, but still splurged on things like good food, wine and beer, canoe trips, golf, good weed - things that enhanced my life. i bot an economical car, shunned jewelry and status travel and cut my own hair with a flobee (no waiting!). i learned that you will not lose friends or lovers if you do these things, because you will only attract true friends and lovers. i retired at age 53, unsure if i had enough, but quickly found that i spent less time worrying about money than when i worked. more time beats more money any day. i am less stressed and, i think, more interesting, at least in a philosophical way. my children have become teachers who like what they do and accumulate the things they need gradually, not using credit. my favorite things are my 20 year old boots and 40 year old antique desk, which i've re-finished three times. i have time to reflect, observe, learn and grow. i believe charity begins at home, and help family, friends, and community. i am the millionaire next door, but you would never know it. see you on the bike trail!

MB, I generally appreciate your comments, and you seem to have a pretty good read on the markets, but based on your posts I'm guessing you're pretty young, probably too young to have even seen the BreX gold mania back in '96. So just a suggestion, you'd do yourself a service to look into the dynamics of a real gold bull/mania. They're something to see, and you really shouldn't miss it if/when it happens.

We will see one more brief, minor correction (to alleviate overbought conditions), and then the markets will go up into the summer. I think that we will correct a small amount soon, and then we will see S&P go up to 1220 over the summer. We will see the last of the rally this summer, unless QE is extended further. Then, the rally can go on as long as it can. How long is anybody's guess. If not, 1220 is the top, then we drop to at least fair value.

The economy will probably recover, but with the removal of stimulus it risks a double dip, much like in 80 and 82. Until the problems with levered balance sheets of households have a chance to play themselves out, we'll see weak growth at best.

True, FOFOA calculates the value at 10 times that amount. Inventory bars should have an RFID chip and GPS sensor, the same bars are most likely moved around to different depositories just in time for their physical inventory counts on different days. If you wanted to prevent fraud you would have a global inventory count on the same day and each bar would have to have a unique identifier.

The anti-gold, pro-banker brigade of agents quickly fill the comments sections but they are easy to spot and it is clear they have a horse in the race.

The only thing you need to understand is that Nixon closed the gold window, meaning he was worried about the United States losing all of its gold reserves. If gold was merely a barbarous relic he would have gladly traded gold for paper.

I suggest you look at the original companies in the DOW, only G.E. survives today.

Look at the value of the dollar from 1913 to today - it is worth 4% of original value

Look at the value of gold from 1913 to today, 30X+ multiple in paper value

Note that the constitutional punishment for currency debasement is death. Now do you understand why central bankers hate the constitution - the founding fathers understood the importance of private property and a sound money system.

“The colonies would gladly have borne the little tax on tea and other matters had it not been that England took away from the colonies their money, which created unemployment and dissatisfaction. The inability of the colonists to get power to issue their own money permanently out of the hands of George III and the international bankers was the prime reason for the revolutionary war.” -Ben Franklin

“The money power preys upon the nation in times of peace and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy, more selfish than bureaucracy.” -Abraham Lincoln

“I killed the bank.” -Andrew Jackson – On his death bed when asked what his most accomplishment was.

“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and the corporations which grow up around them will deprive the people of all property until their children wake up homeless on the continent their father conquered.” -Thomas Jefferson

“I wish it were possible to obtain a single amendment to our constitution – taking from the federal government their power of borrowing.” -Thomas Jefferson

“Controlling our currency, receiving our public moneys, and holding thousands of our citizens in dependence…would be more formidable and dangerous than a military power of the enemy.”- Andrew Jackson

“The real truth of the matter is, as you and I know, that a financial element in the large centers has owned the government of the U.S. since the days of Andrew Jackson.” - Franklin Delano Roosevelt

“Why Lincoln, that is easy; just get congress to pass a bill authorizing the printing of full legal tender treasury notes, and pay your soldiers with them and go ahead and win your war with them also.” -Colonel **** Taylor – on how to finance the Civil War

“Give me control of a nations money and I care not who writes its laws” -Amschel Bauer (Rothschild)

"Since I entered politics, I have chiefly had men's views confided to me privately. Some of the biggest men in the United States, in the Field of commerce and manufacture, are afraid of something. They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they better not speak above their breath when they speak in condemnation of it." Woodrow Wilson,The New Freedom (1913).

"The U.N. is part of that government. They're working right now very significantly towards a North American Union. That's why there's a lot of people in Washington right now who don't care too much about our borders. They have a philosophical belief that national sovereignty is not important. It's also the reason I've made the very strong suggestion the U.S. need not be in the U.N. for national security reasons." Congressman Ron Paul, May 19, 2007.

"The interests behind the Bush Administration, such as the CFR, The Trilateral Commission,founded by Brzezinski for David Rockefeller and the Bliderberger Group, have prepared for and are now moving to implement open world dictatorship within the next five years. They are not fighting against terrorists. They are fighting against citizens." Dr. Johannes B. Koeppl, Ph.D, advisor to NATO Secretary General Manfred Werner, Nov 6, 2001.

"It is the sacred principles enshrined in the United Nations charter to which the American people will henceforth pledge their allegiance." President George Bush addressing the General Assembly of the U.N., February 1,1992.

"We are on the verge of a global transformation. All we need is the right major crisis and the nations will accept the New World Order." David Rockefeller Sept 23, 1994.

"In the next century, nations as we know it will be obsolete; all states will recognize a single, global authority. National sovereignty wasn't such a great idea after all." Strobe Talbot, President Clinton's Deputy Secretary of State, as quoted in Time, July 20th, l992.

"By the end of this decade (2000 AD) we will live under the first One World Government that has ever existed in the society of nations ... a government with absolute authority to decide the basic issues of human survival. One world government is inevitable." Pope John Paul II.

"We are not going to achieve a new world order without paying for it in blood as well as in words and money." Arthur Schlesinger Jr. in Foreign Affairs, July 1995.

"We shall have world government whether or not you like it, by conquest or consent." Statement by Council on Foreign Relations (CFR) member James Warburg to The Senate Foreign Relations Committee on February 17th, l950.

"NAFTA is a major stepping stone to the New World Order." Henry Kissinger when campaigning for the passage of NAFTA.

"...a new world is emerging. It is a new world order...it's being driven forward by a seismic shift in economic power that we see around us". British Prime Minister Gordon Brown, March 11, 2007.

"We are grateful to The Washington Post, The New York Times, Time Magazine and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subject to the bright lights of publicity during those years. But, the work is now much more sophisticated and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national autodetermination practiced in past centuries." David Rockefeller, founder of the Trilateral Commission, in an address to a meeting of The Trilateral Commission, in June, 1991.

"Today, America would be outraged if U.N. troops entered Los Angeles to restore order (referring to the 1991 LA Riot). Tomorrow they will be grateful! This is especially true if they were told that there were an outside threat from beyond, whether real or PROMULGATED, that threatened our very existence. It is then that all peoples of the world will plead to deliver them from this evil. The one thing every man fears is the unknown. When presented with this scenario, individual rights will be willingly relinquished for the guarantee of their well-being granted to them by the World Government." Dr. Henry Kissinger, Bilderberger Conference, Evians, France, 1991.

One in a million understands the system, we are trying to educate the ignorant on ZeroHedge, but there are many disinformation agents. You are all trying to understand what is going on, the quotes above illuminate. Gold enthusiasts do not love shiny yellow metal alone, they love freedom. Precious metals provide individual control and freedom, debt money represents slavery due to debasement.

"For more than a century, ideological extremists at either end of the political spectrum have seized upon well-publicized incidents to attack the Rockefeller family for the inordinate influence they claim we wield over American political and economic institutions. Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as 'internationalists' and of conspiring with others around the world to build a more integrated global political and economic structure - one world, if you will. If that's the charge, I stand guilty, and I am proud of it."

David Rockefeller, Memoirs, 2002

"nation state as a fundamental unit of man's organized life has ceased to be the principal creative force: International banks and multinational corporations are acting and planning in terms that are far in advance of the political concepts of the nation-state."

Have you ever tried to flesh out your ideas on NWO? While Economics is big there is still a bigger form of control that can be established. One which needs to be accomplished yet. For total control, you need to eradicate any belief outside of the self. The higher power , would need to be replaced in peoples life. While the West has had consumerism that has cluttered their lives -replacing the Other, crushing the economics will bring about a gap. This gap would be highlighted by the distress and chaos around them and only would enforce the desire to return to a higher power or to seek one. In understanding the Gulag of Archipelago, this eradication was fostered by a climate simplicity...and then cruel brutal control. The West is a bit more complex and simple erradication I do not believe would work.

“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and the corporations which grow up around them will deprive the people of all property until their children wake up homeless on the continent their father conquered.”-Thomas Jefferson

i personally love that quote...ive read it so many times and i still enjoy reading it....thomas jefferson was a genious(obviously)....gold and precious metals in general are indeed freedom...the concept is my foundation.

I do not hold Snopes up as the authority on what is true and false. The statement is consistent with many similar statements he made - take a different quote from the above list that is fully documented if you wish - it is a straw man to just say false and run away.

How about a few more quotes for you:

James Garfield became President in 1881 with a firm grasp of where the problem lay. "Whosoever controls the volume of money in any country is absolute master of all industry and commerce... And when you realise that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate." James Garfield 1881 Within weeks of releasing this statement President Garfield was assassinated.

'We authorize you (our loan agents in the western states) to loan funds on good real estate to fall due not later than September 1, 1894, and at no time thereafter. And on and after that date we will not renew our loans under any consideration. But on September 1, 1894, we will demand our money. We will foreclose and become Mortgagees in possession. We can in this way take two-thirds of the farms west of the Mississippi and thousands of them east of the Mississippi as well, at our own price. We will own three-fourths of the farms of the West and the money of the nation. Then farmers will become tenants as in England.' - American Bankers Association, 1891 in the congressional record (1913)

'All the perplexities, confusion and distress in America arise not from defects in our Constitution; not from want of honor or virtue, so much as from down right ignorance of the nature of coin, credit and circulation.' - Ex-President John Adams, in a letter to his friend, Ex-President Thomas Jefferson

We have so many excellent quotes outlining the plans. Their target is a one world government/UN, one world bank, etc. That requires tying treaties by leaders of state that overcome and supercede the sovereignty of individual nations and individuals themselves. Don't believe me, it's not a conspiracy theory but a conspiracy by their own words.

Something to contemplate: Since it is difficult to boot out a corrupt city administration; harder still to remove a state / provincial gang of thieves; virtually impossible to change a federal cartel of crooks; imagine the impossibility of changing a criminal "world government".

But,if the worlds leaders/financial institutions were moral, and not into fraud,greed,power, and the hypothetical price of Gold was $5500.00oz., WHO on this site thinks for one second we would get to (A), keep it, (B), be reimbursed for the true value.

Not I. We are considered chattel, slaves of the state,true freedom is only in our minds.

"Obama grew spending on a feed-the-beast theory that forces taxes to rise to match spending. If Obama does not get his way, deficits will be ruinous. If he does get his way, taxes will stifle growth. You cannot tax your way to solvency in a world of low growth and compound interest."

Sorry moron there is no way to hyperinflate out of this mess. The current US system is $52.7T (Q4)down from $52.9T(Q3). So, lets say you hyperinflate.... ok now you are at $75T, well now you interest on $75T. There is no escaping the equation. If he were correct empire of Rome would still be standing.

There is no way out of this mess, billions are going to die. You use the equation and now you don't like the end result of using an unsustainable equation. Well life sucks or more like it will suck.

Credit creation will go to basically zero, the government has no ability to fund itself, if it did tell them to send me over a pizza and my 99 virgins.

You have been hyperinflating for 60 years, now it's over from $400 billion to $53T.

The government can cause one more big spike then that's it. Nobody wants a good party to end yet they all do, the interviewee is a retard.

"The other path involves a gold backed currency at a non-deflationary price"

Telling lies is telling people that their asset will go to 5500 when it obviously will not. Anybody with a remote understanding of either fundamental analysis or technical analysis can see that those "calls" are obviously wishful thinking.

gold 600? well i'm certainly getting more silver if PMs get beaten down to such ridiculous lows. thing is, gold wasn't that low when the sky was falling on other asset classes in 2008 and a lot has happened since then. unpredictable and undesirable scenario to say the least, but i would say with almost certainty that it won't happen.

and at some stage down the line, those without a serious inflation/systemic stability hedge are getting thoroughly screwed. good day :)

If the price ever dropped that low it would be for comex/paper gold only, and would bear no relation to the price you would have to actually pay to acquire real physical gold.

You presumably don't own any gold yourself, because otherwise you would know instinctively that nobody who owns physical gold is actually going to SELL it for just 600 paper dollars! Get a clue. Even better, get some gold - this will give you some insight into how wrong your current thinking is.

Good point. I believe the only answer is a Hard ball approach , if you will. Just default and put the dollar on a gold standard at say 10,000 per ounce. Just tell the world we are no longer able to play and we hereby withdraw fully armed.

I agree. I know there are a lot of perma-gold bugs here, but I just can't imagine hyperinflation as an outcome of this mess. Above all, the US needs to borrow to stay alive. No one lends to a hyperinflator. How is the IRS going to collect taxes in a hyperinflationary economy? Not going to happen. Deflation is the less painful choice. The US is not Zimbabwe. The US administration cannot hyperinflate, destroy the economy, and hop a plane for a friendly african country.

Hyperinflation is a currency event a crisis, inflation is merely demand. America can easily have Hyperinflation. Inflation and hyperinflation only read the same they are different beast. Although the selling of paper would still be needed thus the Gold backing at least in part.

Study weimar again. Hyperinflation is a debt crisis. The people who owe the debts have a printer. They never default so they simply create the money. It's what happens a few milliseconds after massive deflation hits. Now the banks are broke so they are able to print some while the FED closes some down pretending there are rules to the game.

last time I looked, no one was lending to us already. these elites, are not loyal, to anything american. the world has been hijacked. the only thing they need to preserve is the mechanism, that provides their security, and enables them, to destroy any threat. at this stage, the only way to increase relative wealth, is to reduce the world population, think palestine

the hyperinflation argument is kind of moot at times. but what is probable is some type of fascist-communist soviet system emerging in USA and around the world. not the NWO or anything too far fetched, but an 'old world order' vicegrip as the future physical reality kicks in and nobody has planned for it properly.

bottom line, maybe buy some gold but ultimately side-step the mess by moving away, living in a self-sustaining community, etc....

It's hard for me to even understand what you're saying. 1) You're using a very strange definition of hyperinflation. 2) I don't see how hyperinflation takes it from 52.7T to 75T. Whatever it is you're talking about 3) James Rickards is saying hyperinflation is one path to clear the debt. He's not saying its a solution to our problems. 4) Go listen to his King World News interview...you're way out of your league; stay in school 5) Interest doesn't occur instantaneously. Fixed rate interest stays fixed 6)In real hyperinflation situations the rate of growth of inflation steadily increased.

"Sorry moron there is no way to hyperinflate out of this mess. The current US system is $52.7T (Q4)down from $52.9T(Q3). So, lets say you hyperinflate.... ok now you are at $75T, well now you interest on $75T. There is no escaping the equation. If he were correct empire of Rome would still be standing."

It was only the western empire that collapsed. People forget that the eastern empire stood another 1000 years. Christianity had its start in the east, and its population was always heavier there, thus all the Ecumenical Councils were in the east. The western empire, like the American "blue states", lost the will to live, had few if any children, and ignored or granted "amnesty" to endless hordes crossing the border.

first there are no "lawyers" they are only "attorneys" (post 1937) sworn members of the Bar, foreign agents of the militant Court with the rank Esquire. The verb attorn means "obtaining and returning moneys to the Crown."

They are licensed liars as their allegiance is to the Court. First. As in before the "client."

"turned economist" oh liar and foreign agent enrobed in the clothes of Keynes?

In the words of jurisprudence: "You are required to disregard any testimony heard from a person you know to be untruthful."

You admit you don't know what he is talking about, then proceed to illustrate the depth of your ignorance. Its cool that you don't want to understand what people are talking about and continue to post egregious misrepresentations, depsite repeated attempts by ZHers to clue you in. But don't expect people to stop laughing at you and junking your posts.

Ok i'll take the bait seeing as this place is too fixated with hyperinflation imo.

Consumer credit , the CORNERSTONE of the modern economic ponzio scheme , is contracting meaningfully for the FIRST TIME EVER. We require exponential growth in credit to keep the ponzi going. It doesnt matter what the govn or Fed do with QE , if the credit monster is shrinking , they are pushing on the proverbial string.

Int rates CANNOT rise , because the govn/fed/system will just default even quicker than it is going to. WE CANNOT HAVE A SHRINKING CREDIT BASED ECONOMY PLUS RISING DEBT WITH HIGHER COMPOUNDING INTEREST RATES.

Please explain to me how hyperinflation helps as a policy choice , deliberate or "accidentally" . It does precisely nada.

This is not to say the gold bugs are wrong ,they are very likely going to be very right in the long run , its simply saying the end game is a default on obligations because the game is over.

Deflation is the over-riding bogeyman for the next generation and the generation after that until the system is collapsed. We entered the period of collapse in 2007 - Bernanke is being ordered to make the collapse orderly.

Spot on brother, spot on. You said everything and then some, we will have extreme hyperinflation and then dissolving of the govt. into 5 to 6 regional govt./countries to take care of themselves. Because we are broke and we will default, the world and other govt. know it but they are trying to slowly position itself to get as much resources from these green pieces of paper. Oh the world will feel the pain, but the US will feel it alot worse because we have a convergence of forces happening at one time. Baby Boomers wanting their govt. benefits, job losses because of the bubbles and also the offshoring of jobs to other countries. The states not funding the their state workers pensions enough to stop them from imploding (it will happen to federal workers also don't worry). The states broke and their munibonds are becoming less and less of an investment idea for other financial institutions. The last leg of the fiat currencies. And the debt of this country and everyone in it being to much to service.

All of this and more have came together and it's a massive category 13 hurricane on a scale of 5.

Not to go OT here but just imagine how futile any effort at globalization really was with this system. Better get back to basic nation building economics and forget the silly notion we can all get along. Never has been true never will.

The foundation of humanity is.... a 23 long chain pairing of chromosomes, a cell, an organ/or organ system, a body, a family, a community, a nation, a species, a world, a solar system, a galaxy, a universe?

Where does the water drop end, and the ocean start?

A very interesting question.

I would posit that within the bounds of reality a further dichotomy presents itself in which there is the relativistic reality that is as you say separateness is the basis of oneness, but conversely a universal reality that the basis of oneness is entanglement.

What am I saying? We're all special little snowflakes, special and different, just like everybody else.

Eh, what the hell are you talking about? Protecting individual property rights and allowing law-abiding individuals to travel and transact freely is crap?

You're not referring to capitalism, but corruption, i.e. the lack of the rule of law - the USA has not cornered the market on that. "We" citizens have not exported military rule to foreign countries - the bankers have. Average citizens have nothing to do with this except for the sin of omission of not rising up and putting heads on very tall pikes. This government no longer represents "the People".

public sentiment is everything, if we were truly opposed to this govt, it wouldn't last a day longer...yes, people have been manipulated and duped, but we could stop it, if we were adamant and clear enough about the problems and solutions. We are not the equivalent to slaves in early 1800s in Southern US or North Koreans, who I see as having little chance of liberty or successful rebellion without outside help.... we could change this, but we don't.

I take a more cynical view of the one world government thing. When a business is desperate for cash it will look to merge with another business - one where the bank balance is full of cash and the shareholders are short of common sense.

Was the "one world government" story a case where the bankrupt G7 were floating a scheme to take over the assets of other countries?

The spectre of sovereign insolvency is out in the open now so the argy bargy over valuing the "assets" for the "merger" might get rather interesting if they continue with the scheme.

I was talking about backing the dollar with the gold held in Ft. Knox. There isn't nearly as much there as they say there is, so if they tried that, they would have to set it at the levels I described.

If you search via bing.com for something like "100 oz silver" the top link (in the paid section) will be a Bing Cashback link. It will get you 8% off plus you get 2% from ebay for a nice total of 10% off (must be Buy it Now auctions). Total including S&H would be $1939.50... current market price for a silver eagle is $20.63 so you'd be buying at $123.50 less than market SHIPPED!

This deal won't be around for long. I am hoping for a pull back in prices with JPM trying one last MAJOR short of silver before their con is up. If so I'm buying as much as I can get.

You make a good point about collapse/reset - but I think it's more about corruption and decadence, not growth hitting a limit. With a "natural", free-market interest rate growth will be much slower, but much more robust. Many say the West would not have been developed so quickly if it had not been for ez-credit, but there would not be as many ghost towns.

Even if credit is rarely extended because the interest rate would be less than the growth rate, as B9K9 has pointed out recently, there will still be individuals teaming their resources to build whatever it is they dream up - everything else is gambling, and we know how that always ends.

A gold or silver standard is the only way to protect wealth and ensure robust growth.

I think the largest difference between organic growth and growth on the back of credit expansion is the behaviour of capital. Organic growth is through technological advancement and supply chain innovations. The former increases the productive efficiency of a given amount of capital by, for example, increasing the rate of output, and the latter increases the productive efficiency of capital by arranging factors of production/supply chains/etc. in such a way as to maximize cost efficiencies in the real world. It's an increase in precision/efficiency that leads to growth, capitalism scalpel-style.

Under the current system we have capitalism "bigger hammer"-style. Credit expansion only creates a temporary opportunity to increase consumption and thus the size of the production base to feed the demand. It's that simple. Organic growth can coincide with this, and technological advancements may even be accelerated with it but the interconnectedness of economic activity unfortunately dictates that the inevitable deflationary period will hobble all productive activity.

Oh, I can only hope you return, but I love the "capital behavior" description.

Is that not the essence of economics?

but the interconnectedness of economic activity unfortunately dictates that the inevitable deflationary period will hobble all productive activity.

We can all agree that once citizens view "state" jobs as the best job opportunity, because of excessively great vacation/benefits (in comparison to the private, tax-paying fields), we have reached a point of UN-sustainability.

The only reason we have not yet collapsed is because of the lack of understanding when it comes to the real nature of taxes. Taxes, in the time of a Printing Pre$$, are two-fold in nature:

How gauche, pointing out the drunken credit-revelers who've moved the party to the last after-hours debt booze can that 'after we finish this bottle of creme-de-menthe, we're down to the vanilla, lysol and mouthwash, and then the party's over'.

Not only are you a blatant liar, but you are a particularly stupid liar.

Firstly, that poll was asking forum members their opinion of whether gold would be over or under $2000 an ounce on July 1, 2010, NOT in April.

Much more importantly, only 31% of respondents felt that it would reach or exceed that price by that date --- not the 90% figure that you keep maliciously repeating in your posts.

We all recognize beyond a shadow of a doubt your hatred and loathing for gold, its advocates and those who (wisely) hold it, but really, if you are going to continue entertaining us with your hysterical and irrational gold-trashing rants, at least get your facts straight.

I thought you didn't know the poll... LOL. I guess I was wrong about the timeframe, but I seem to remember everybody and their brother posting about it every five minutes when it was at 1200. Then it crashed, just like I said it would. Now it's on the way to make a double top.

Anyway, it's obvious it won't be hitting 2000 any time soon. If it can't hit 2000, it sure as hell won't hit 5500.

People who hold gold at high levels are nothing but bagholders. Sorry, it's true.

I'd rather be holding on to a bag of Gold than an irrational hatred of an inert element.

(notice that I refrained from using your remarkably tiny penis as an anology... I'm not here to insult you)

Long before I bought Gold, I wondered why people were so intense in their hatred. I don't see that with Platinum, Palladium, Rhodium, or even Silver. Strange... especially when you look at how Palladium has shot up in price. I don't own any, but I wish those that do the best of luck. It's their passion and it has even out-preformed Gold.

I think Palladium is way over priced, but that's just an opinion just like yours.

LOL at the notion that anybody who reads this blog is objective. I mean seriously. Everybody here believes so much one way or the other about every investment issue that none are really truly rational.

As far as being an asshole, I'd rather be an asshole than a moron with no basis in reality for my investment decisions aside from:

Gold is prettyGold is shinyYou can hold it in your handGOLD BITCHEZ!

So really, when gold plummets in a couple of years, picture me laughing at you.

But you probably own lots of US debt and dollars right ? Just when losers like you thought you had the bubble thing figured out, along comes ben bernanke with the fiat bubble that you are right in the middle of.

What a blinkered, disingenuous, idiotic argument! I see logic and truth are not even passing acquaintances of yours.

What you conveniently fail to mention, Nadler, is that the dollar has fallen FAR more than 33% since 2001. You need to add to that 33% fall in the (virtually meaningless) DXY the ADDITIONAL 50-60% it has fallen in actual purchasing power --- in other words, the ongoing depreciation in its REAL value that has occurred since the DXY was at 120, NOT just its decline in relation to other, also depreciating fiat currencies in that same timeframe.

And aside from the REAL math of dollar depreciation, you utterly fail to acknowledge that the world was not facing financial and monetary implosion 8 or 9 years ago as it is today. In light of those inconvenient little facts, you somehow would have us believe that gold should ONLY have risen in line with the fall in the value of the dollar? Are you SERIOUS?

Really, this is the best you can do? This is like shooting fish out of a barrel --- particularly blind and intellectually incompetent fish at that.

And here you are saying that the dollar has lost 83-93% of its purchasing power since 2001.

And you have the audacity to tell me I don't know what I'm talking about.

Is a 20000 dollar car in 2001 200000 now? Cause that's what would have happened if your scenario was true. But it isn't. I mean really, the dollar lost 33% plus another 60%??? Wow. You must be fucking high!

Name one thing that has gone up nine times since 2001, aside from maybe gold going up half that. NOTHING else has. NOT A DAMN THING AT ALL. Maybe some shitty penny stock, but that's the exception, and not the rule.

The only thing propping up the price of gold is paranoid conspiracy theorists like you. That's EXACTLY my point. THAT is why gold is so much higher than the decline of the dollar.

Severe hyperinflation is priced in ALREADY many times over. That's why gold won't rise much EVEN IF we print a bunch of money and the system crashes. You people have ALREADY priced those things in. The dollar has fallen 33%, and gold is up 500%.

You can't prove any possible way with your so called "mathematics" that the dollar has fallen more than that.

If you can, please do so. Name one thing that is priced to suggest that the dollar has lost 93% of its purchasing power since 2001.

MB, you complete and absolutely retarded troll, can you do ANYTHING other than make strawman arguments and put words into other people's mouths?

Any idiot (any idiot but you, anyway) would know that one cannot add the % fall in the DXY AND the real % depreciation of the dollar in the same time frame! My point was that the dollar's loss of value is not JUST represented by the 33% fall in the DXY, but that the depreciation of its actual purchasing value (i.e., "inflation") needs to be accounted for as well. Your ridiculous attempt to put words in my mouth and claim that the dollar has fallen 90% in value since 2001 is strictly YOUR suggestion, and just further demonstrates your disingenuous, lying nature and complete lack of credibility.

Master Bates, you are one of the most contemptible trolls I have ever encountered.